The number of shares actually available for public trading, excluding insider and restricted holdings.
Float is shares outstanding minus shares locked up by insiders, employees, and large strategic holders. A low-float stock has few shares to trade, so relatively small demand can move it a long way in either direction.
Low float combined with high short-interest is the classic setup for a short-squeeze. It is also the setup for violent reversals.
Example: a company has 20 million shares outstanding but insiders hold 15 million. The float is 5 million. If 3 million shares trade in a day, the float turned over 60%.
Original diagrams for the ideas on this page. Illustrative, not real market data.
Bollinger bands: squeeze and expansion. The middle line is a 20-day average and the outer bands sit a set number of standard deviations away, so they measure how far price has recently been straying. When moves are small the bands pinch together; when moves grow they spread apart.
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